Investment Plan

Adjusting our fleet commitments

In 2012, the LATAM Group announced the execution of a fleet renewal plan aimed at reducing the variety of aircraft currently operating and to gradually withdraw those deemed less efficient. As of December 2016, the airline’s plan continued to make progress, withdrawing a total of 23 aircraft during 2016, among which are the latest Airbus A330; a model that was completely eradicated from the fleet. Additionally, the company incorporated 24 new larger and more efficient aircraft, such as the Airbus A321, Airbus A350, Boeing 787-9 and the first Airbus A320neo’s.

During 2016, the company made significant progress in its plan to reduce the fleet’s total assets and commitments, reaching the lowest fleet commitment in LATAM’s recent history for 2017 and 2018. LATAM reduced its fleet commitments through postponements and cancellations; moreover, it will also reduce its current fleet assets by returning additional aircraft as compared to last year’s fleet plan. With this, the company achieved a reduction of US$ 2.2 billion in fleet assets for the period between 2016-2018; all of it in line with its previously-announced plans to reduce its expected 2018 fleet assets by US$ 2.0 to US$ 3.0 billion

Such reductions will improve the Company’s balance sheet and allow a greater flexibility to better respond to market conditions in the coming years. The benefits of such reductions will be observed during the next couple of years through lower lease and capital expenses, along with lower financing needs, thus improving the generation of the company’s cash flow and strengthening its balance sheet.

Additionally, LATAM expects to have a non-fleet CAPEX (including intangible assets) of approximately US$ 500 million per year, including maintenance, investments in engines and spare parts and the cost of executing the new domestic business model, among others.

At year end

2015

2016

2017E

2018E

Passenger Aircraft

Narrow Body

Airbus A319-100

50

48

45

45

Airbus A320-200

154

146

126

116

Airbus A320 Neo

-

2

7

11

Airbus A321-200

36

47

47

47

Airbus A321 Neo

-

-

-

2

TOTAL

240

243

225

221

Wide Body

Airbus A330-200

10

-

0

-

Boeing 767-300

38

37

36

36

Airbus A350-900

1

7

7

9

Airbus A350-1000

-

-

-

-

Boeing 777-300 ER

10

10

10

7

Boeing 787-8

10

10

10

10

Boeing 787-9

7

12

14

14

TOTAL

76

76

77

76

Cargo Aircraft

Boeing 777-200F

3

2

1

1

Boeing 767-300F

8

8

8

8

11

10

9

9

TOTAL FLEET

327

329

311

306

Subleases

Airbus A320-200

-

-

5

5

Airbus A350-900

-

-

4

-

Boeing 787-8

-

-

2

4

Boeing 777-200F

1

0

1

1

Boeing 767-300F

3

3

1

1

TOTAL

4

3

7

7

Fleet commitments (US$ million)

1.689

1.952

469

555

Note: This table does not include 4 A350-900 that will be subleased to Qatar for periods of between six and 12 months during 2017 and 2018.

Does not include two B777-200F (one currently leased to a third party), three A330 and one A320 that were reclassified from property plant and equipment to hold for sale.